The concept of agency, broadly, refers to an action intended to achieve a particular outcome.
If I'm hungry and capable of getting up from my desk to walk to the kitchen to make a snack, I can choose to exercise my agency to stand up, traverse that distance, and perform that activity—or not. It’s up to me, but the capacity to recognize that state, make that decision, and perform those actions are there, either way.
In the world of psychology, agency means something similar but with the supplementary implication that an agent—an entity with agency—is also capable of perceiving their context and utilizing their agency to adjust the environments they occupy.
In the aforementioned, hunger-related example, this means that my recognizing my own hunger is a component of my role as an agent: I am both capable of recognizing hunger and then acting to ameliorate it, or not.
In philosophy, agency likewise refers to an entity’s ability to act within a given context—and if we take a few steps to the side into the world of sociology, it also implies the ability to act within the confines of an imaginary, but practically quite real, social structure—with the added dimension of morality, which is sometimes forked off into a sub-category called moral agency.
A moral agent is an entity that is capable of making moral judgements according to some understanding of right and wrong. It’s an entity that can, in other words, decide to kill and eat something based on an ethical code or sense of something being okay or not okay, as opposed to killing or not killing based on instinct: clockwork genetic code, basically, that tells it to kill and eat, or not, for survival and procreation purposes.
This forking of the concept is important, because it implies—to some, at least—that it’s impossible to truly have agency unless you’re capable of rational thought.
Any creature lacking the ability to make purposeful decisions based on reasoned arguments, those arguments predicated on some internal sense of correctness, is likely acting on instinct or something similar to instinct, and is thus merely responding to variables in their environment in a pre-programmed way, rather than consciously assessing, thinking, and acting of their own volition.
Our ability to parse agents in our environment—agent detection—is thought to be an evolved survival mechanism that has allowed us to better understand the spaces we occupy, but also, in some cases, dominate those spaces. It also potentially helps us tribe up, work together, and both sympathize and empathize with other entities that we perceive to have agency: other humans, but also some animals, and even inanimate objects like software or robots.
If we can reason different outcomes based on different actions taken, and if we have a sense of right and wrong based on consciously held philosophies, ethical standards, and so on, we can also take actions that seeming non-agents—like some animals, which seem to be acting in accordance with their instincts rather than conscious thought or moral judgements—cannot predict, perceive, or prevent.
That said, there are several branches of philosophy that posit a different relationship entirely.
Determinists, for instance, typically claim that things play out based on preexisting causes, not based on the choices individuals make. Which implies, essentially, that although we believe we have free will and agency, in fact we’re no more or less autonomous than the animals we differentiate ourselves from: we might have something we perceive as consciousness which makes us feel like we possess agency, but our actions are just as predictable to anyone with all the data informing the choices we believe we’re making as the actions of animals lacking that perceived capacity for free will.
This conception of the world can seem disturbing to those of us who prefer to think of ourselves as agents—both moral and practical—but it’s also difficult to disprove, as even arguments in favor of human agency must take the habits, reflexes, thinking patterns, heuristics, and other such attributes of the actor in question into account, and all of those things are shaped—ostensibly at least—by past experience, their level of knowledge at the moment in which they make said decision, genetics, and other seemingly deterministic attributes.
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